We explain what corporate social responsibility is, its main characteristics and advantages. In addition, we explore its importance, and provide examples.
What is corporate social responsibility?
Corporate social responsibility (CSR) is a type of comprehensive business management that aims at company growth, while helping it be accountable to social welfare and environmental protection.
CSR is a company's commitment to society, and is based on ethical and moral issues that influence the development of an organization.
Ethics defines human actions according to a set of norms and values that may vary according to each culture. As far as CSR is concerned, ethics refers to the correct or incorrect practices by an organization's management regarding various areas, such as:
- Respect for human rights, both of employees and consumers.
- Organizational culture, which should promote the value that people, the community and the environment represent for the company.
- Control of the impact created by company activity on the environment.
- Cruelty-free practices and tests.
- Sustainable use of natural resources and raw materials, as well as adequate waste treatment.
- Consistency between corporate communication and corporate actions.
- Commitment to socially responsible management over time.
- Promotion of social welfare and environmental actions and programs.
- See also: Organizational behavior
Characteristics of corporate social responsibility
The main characteristics of corporate social responsibility management are:
- It combines business development and the ethical impact of corporate actions.
- It is the company's commitment to society and the environment.
- It contributes to the preservation of natural resources and biodiversity that have still not been exploited responsibly in the mass consumption system.
- It promotes employee rights, social inclusion, and people development.
- It is a way of balancing consumer capitalism (which seeks to obtain profit with the least possible time and expense), and natural and human resources.
- It is a decision made by company management, which may be self-regulated or imposed by government regulations as a measure against social, climate, or environmental issues.
- It represents a challenge for company management, as it involves energy and money. However, it also benefits it by improving corporate image and customer loyalty, and in some cases, by tax reduction.
Importance of CSR
Businesses are created with the intention of making profits by satisfying a consumer need.
However, satisfying a need can have a negative impact on the community and on the environment in cases where companies only prioritize the profitability of their business in the short term.
For example: A coffee manufacturer produces and sells high-quality products with excellent customer service. However, if the raw material comes from child labor and farmers’ exploitation, the company's management is unethical.
In order to guarantee a responsible production, the company will need to ensure labor standards, such as obtaining certificates that attest the origin of the raw material:
- Sustainable sourcing. It means that the processes of obtaining the raw material preserve the environment and biodiversity.
- Sourcing respecting human dignity standards. It means that the process of obtaining raw material is carried out respecting workers’ rights, so the company does not finance nor support exploitation or forced labor.
Corporate social responsibility is key, as it balances business development and preserves people and the environment. It generates a long-term benefit, both for the company and for society and the planet.
Companies that do not apply CSR management prioritize the sole objective of making the greatest profit in the shortest possible time. On the other hand, companies that do apply CSR management make a commitment to the future, to their business, and to the community at large.
Advantages of CSR management
Companies that engage in CSR strategies gain advantages for their business by:
- Building customer loyalty, whose consumption is environmentally responsible.
- Attracting new customers thanks to the organization’s competitive advantage and its sustainable production system.
- Bolstering company image by communicating in a more transparent and conscious way with consumers.
- Reducing imposed taxes (in some countries, there are tax incentive mechanisms that seek to encourage companies to adopt CSR strategies).
Examples of companies with CSR management
Examples of companies that have implemented corporate social responsibility management are:
- Natura Cosmetics. A Brazilian company that sells beauty and personal care products worldwide. Its CSR strategy includes plastic reduction in packaging, the use of natural ingredients from sustainable sources, cruelty-free testing, and dignified and safe working conditions in obtaining its raw materials. In 2021, it was selected as one of the leading ethical companies in the world, together with Avon, an American company in the same industry.
- Ikea. A Swedish multinational engaged in the manufacture and retail sale of furniture, household appliances and home accessories. Its CSR strategy includes a circular business model that respects the environment and offers fair and equal treatment in its business relations. In addition, the company carries out actions against poverty and climate change through the "Ikea foundation", which emphasizes its commitment to CSR management.
- Herrera, H. M. (2005). El marco ético de la responsabilidad social empresarial. Pontificia Universidad Javeriana.
- Andrade León, J. R. (2021). La ética moral y la responsabilidad social empresarial. Linkedin.
- Santander Universidades (2021). Empresas con responsabilidad social corporativa. Becas Santander.